Qualifying income comes from averaging eligible deposits over 12 or 24 months — then applying a personal deposit factor or business expense factor. Here is the math lenders use on Non-QM files.
Four steps from raw statements to monthly qualifying income.
Collect 12 or 24 consecutive months of personal or business statements — all pages, same account series.
Remove transfers, loans, gifts, and other non-revenue credits so only eligible deposits remain.
Total eligible deposits ÷ number of months = average monthly deposits.
Multiply by the personal deposit percentage or business expense factor (and ownership % when required).
Which factor you use depends on the account type — and it changes usable income.
Personal statements
Personal programs often count a high share of eligible deposits — sometimes 50–100% depending on the investor. Owner draws that land in personal checking can be the income event.
Business statements
Business programs typically assume operating costs via an expense factor (often ~50%) or accept a CPA letter. Ownership percentage adjusts the result on multi-owner entities.
Factors and expense assumptions vary by investor. We run both paths when your accounts support it.
NSF fees, unexplained large deposits, and gaps between statement periods force underwriters to exclude months or request letters of explanation — which can shrink average deposits.
Mixing personal spending through a business account (or vice versa) also creates noise. Cleaner accounts usually produce cleaner — and higher — qualifying income.
Before you write an offer, Ryan & Steve walk your deposit history so the calculated number supports the purchase price.
Quick example (illustrative)
Example only — your factor, lookback, and exclusions will differ by program.
Related bank statement guides and Non-QM resources from Ryan & Steve.
Expense factors, ownership docs, and multi-owner business accounts.
Personal deposit factors and owner-draw documentation.
12 vs. 24 month lookbacks that feed the income calc.
Full program hub with eligibility and documents.
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Lenders total eligible deposits over 12 or 24 consecutive months, divide by the number of months to get average monthly deposits, then apply a deposit percentage (personal) or expense factor (business). Ownership percentage may further adjust the result on entity files.
Transfers between your own accounts, loan proceeds, large one-time gifts or capital contributions, and other non-revenue credits are typically removed so income reflects business or self-employment cash flow — not recycled money.
On some business-statement programs, a CPA expense letter or P&L can support a lower expense ratio than the investor’s default factor — increasing usable income when your real margins are strong.
No. Conventional underwriting uses taxable income from returns and W-2s. Bank statement income follows deposits in the account, which often qualifies better when write-offs suppress AGI.
Ryan & Steve run the income calc on your actual statements — so you know what qualifies before you write an offer.
Ryan Minick and Steve DeLon — Branch Managers & Senior Loan Officers at Luminate Bank. Based in Kokomo, Indiana. Lending nationwide since 2005.
Contact
Ryan Minick NMLS# 203249
Steve DeLon NMLS# 202876
Luminate Bank NMLS# 1281698
Kokomo's Mortgage Team. Lending Nationwide.
1221 Appletree Lane, Kokomo, IN 46902
Luminate Bank NMLS 1281698 Bank Headquarters 2523 S. Wayzata Blvd., Suite 100 Minneapolis, MN 55405 (952) 939-7200. This is not an offer to enter into an agreement. Information provided is outlining the minimum down payment requirements as allowed by specific loan program and product guidelines and any information, rates and programs are subject to change without prior notice and may not be available in all states. All loans are subject to credit and property approval. Luminate Bank is not affiliated with any government agency. All rights reserved.
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